Asean deeply concerned by US tariffs, wants good China ties

Asean economies were poised to be among the hardest hit by the levies, with rates of as high as 49%. (Courtesy: Bloomberg)

Members of the Association of Southeast Asian Nations are “deeply concerned” over President Donald Trump’s trade plans even after the US leader paused most tariffs, and said they will seek talks with Washington.

“This has caused uncertainty and will bring significant challenges to businesses, especially micro, small, and medium enterprises as well as to global trade dynamics,” economic ministers from the group of 10 Southeast Asian countries said in a joint statement on Thursday, following a virtual meeting. “We express our common intention to engage in a frank and constructive dialogue with the US to address trade-related concerns.”

Asean economies were poised to be among the hardest hit by the levies, with rates of as high as 49%. The countries, along with aspiring member Timor-Leste, unanimously refuted the basis used in US calculations, Malaysia’s Ministry of Investment, Trade and Industry said in a separate statement. The US was Asean’s largest source of foreign direct investments and the bloc’s second-biggest trading partner last year.

Trump announced on Wednesday a 90-day pause on steep global tariffs, about 13 hours after high duties on 56 nations and the European Union took effect. Countries that were hit with those reciprocal levies will now be taxed at the earlier 10% baseline rate applied to other nations — with the exception of China.

Trump further escalated duties on Asia’s largest economy to 125% with effect from Thursday, with Beijing reciprocating with an 84% tariff on all imports from the US.

That “very strong, hardened position” will have an impact beyond China, said Malaysian Prime Minister Anwar Ibrahim, whose country is the current chair of Asean.

“We continue to have good bilateral and excellent trading, investment relations with the United States,” Anwar said in a briefing Thursday. But Asean also wants “to ensure that our relations, particularly with China, Japan, Korea, neighboring countries, remain strong, formidable.”

There was broad relief in much of Asia today as Trump paused the higher tariffs for most countries, with regional stocks surging. The threat of punishing levies had roiled markets and sparked fears of a recession.

The climbdown provides Asean with “a window of opportunity to find a pragmatic and mutually advantageous solution” for the group, Malaysia’s trade ministry said.

The bloc agreed that retaliation isn’t an option and sought to further boost trade and investment within the region.

The ministers said they agreed to set up an “Asean Geoeconomics Task Force” for the group to come up with a forward-looking regional policy response to economic and geopolitical challenges “in an increasingly complex global landscape.”